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Culture, Media and Sport Committee talks broadband
Saturday 12 December 2015 11:44:14 by Andrew Ferguson

We have grown used to evidence sessions to various Parliamentary committees becoming a succession of sound-bites and battlegrounds but the latest one that took place on Wednesday 9th December is worth a watch if you are curious to learn more about the superfast broadband roll-outs that are using public money or simpler after more facts to support what you believe is right or wrong with the whole process.

The session had just Sean Williams, Group Director Strategy, Policy and Portfolio, BT Group and Kim Mears, Managing Director Infrastructure Delivery, Openreach answering questions from the members of the committee with the second half of the meeting turned over to a grilling of Chris Townsend who is the Chief Executive of BDUK along with Andrew Field who is the Superfast Broadband Programme Director BDUK.

Based on the questions the committee asked many of the issues are the same as prominent commentators make here and elsewhere, so what is new or at least now on the record rather than hearsay. We now know that for every ten percentage points of take-up the clawback mechanism will payback £129m and when combined with the underspend so far that has been identified of some £150m so far it is believed that phase 1 and phase2 will take superfast coverage to around 96% of UK premises and BDUK is putting pressure on the commercial operators and BT ensure that slow parts of the urban UK see more commercial investment and this should take superfast coverage to 97%.

Chris Townsend emphasised that a key benefit from the existing phase 1 contracts has been the speed of delivery and that a lot has been done in a short time frame and he confirmed that where premises don't get 24 Mbps even if FTTC is theoretically available BT will not get paid for delivering FTTC to that premise.

For the final 3%, there is the USO (Universal Service Obligation) which should get thrashed out during 2016, but we would add that what happens with Openreach and the BT Group may have an impact there. Fingers cross the new Investment Fund that will also help to encourage more smaller operators to build superfast and ultrafast networks in the final 3%.

For those living in areas like Devon and Somerset the CDS project was discussed and the successful suppliers meeting day that involved a large number of suppliers (including BT) means things are moving. One key change is that rather than one large contract for the area like in phase 1 we are looking at something like seven smaller contracts to help favour smaller operators. Extrapolating the names of people we have heard attending we might see something like Gigaclear chasing North Somerset areas and Relish looking to extend south and west from Swindon, certainly there is no consensus on the technology and this will make it very interesting in the years after the contract has been delivered.


Posted by jumpmum 11 months ago
This should answer some of VFMs requests.
There is now a declared Capital spend from BT of £276m to Sep 15, with current account spend higher than this ( Not capitalised due to accounting rules). Also a projected capital of £440m in total and £470m Currnt. With revenue of under £50m so far
Posted by cyberdoyle 11 months ago
Strange that for such an important meeting that Chris Townsend wasn't in the room with Sean and Kim? Strange that some good questions were asked, but answers not given, and questioners didn't persevere until they got an answer. This is why openreach are succeeding in pulling the wool over everyone's eyes. If the politiciians don't understand the question, they ain't gonna understand the answer. Sean knows this, but his time is running out. He can't get away with it forever. Kim had no answers really. She tows the party line. Preserve the copper at all costs.
Posted by jumpmum 11 months ago

Chris Townsend was up next at 15:21:37, if you watched the whole session. They call witnesses in for specific sessions and split BT and BDUK witnesses into 2 sessions following each other. You can only appear if 'invited' although some people take 'legal' representives with them for 'advice'
Posted by jumpmum 11 months ago
Agree the politicians don't even understand the questions they are asking, they clearly did not/do not understand the accounting differences between capital and current account spending. They also did not understand that all BTs fibre based products are available to all retailers and not just BT Retail.
Posted by MCM999 11 months ago
@CD "If the politiciians don't understand the question", a bit like yourself then who gives the impression of knowing or understanding little of what is happening outside the B4RN area yet only too happy to criticise what others are doing.
Posted by Blackmamba 11 months ago
Hi Broadband Watchers.
My understand from the above it is good news for Surrey SCC that customers that are on a post code that is unable to get a speed above 24 meg down will not be paying thus moving the target from 15 meg. This I would think increases the money in the pot for the OMR looking at the original target of 99.7% above 15 meg.
Posted by ValueforMoney 11 months ago
@jumpmum - The £276m declared, we now need to know where it sits. I think it is owed to the process, hence words like - 'incurred' ..'deliverd' ..even 'anticipated'.
£694m state aid receipts for for 17,500 cabinets is OTT even when we count some FTTP. So the £276m of which £230-£240m is for BDUK to September 2015.
Posted by ValueforMoney 11 months ago
IN addition to the £230-£240m thre are the proxy costs in the early projects to be recovered. There is £70-£90m in wales alone due to charging £234 per premise passed.
Posted by ValueforMoney 11 months ago
The BT reps would have is believe the average cost for FTTC is £500 per premise passed. At 200 premises on average that is £100,000 while the NAO reported £25,000 before BT capital in January. A bit to go on this matter yet.
Posted by gerarda 11 months ago
It a pity that in all the discussion about the BDUK procurement process no-one the questioned whether or not the "cover the most premises for the least initial cost" approach was actually one that was ever going to be one that was capable of "establishing world class connectivity throughout the uk" which was the subject of the session
Posted by ValueforMoney 11 months ago
At least it is simplied is the BT £230m (of the £276m) been paid or is it an accrual?
Is BT contribution (£230m/17,500 cabints) of £13k in addition to the £25k reported by the NAO or is it due to come off the £25k?
It does show BT's capital on commercial rollout, would 50k cabs x £13k well below a £1bn.
Posted by andrew (Favicon staff member) 11 months ago
@valueformoney so in the commercial roll-out where did the other money for the cabinets vanish to? Or are you stating as a fact that every commercial cabinet was installed and live for a cost of just £13,000 each?
Posted by ValueforMoney 11 months ago
Andrew, - capital only budget closer to £15k. Need to add £200-£300 on the OSS.
You can add ten years of operational costs on top which Audit Scotland referenced £10 a year per customer for 10 years. 20m premises = £2bn. There is your £3bn.
Posted by ValueforMoney 11 months ago
@andrew - why not run with either £25k + £13k or £25k minus £13k. This is to reach 90%. I say it needs to be minus and the money is owed.
The former represents reasonable value but the latter permits signficant FTT dp and i believe the evidence available points that way.
Posted by ValueforMoney 11 months ago
@andrew £200-£300 is million, so total commercial capital is c£1bn and 10 years opex is £2bn.
Posted by andrew (Favicon staff member) 11 months ago

Glad you got to the £2bn to £3bn would not want people getting the impression you were trying to say the commercial roll-out cost well under a billion would we.
Posted by ValueforMoney 11 months ago
@Andrew - the opex is a bit of joke really as it does not appear in the capex expenditure, and is not based on anything really. It was made up as FTTP was dropped.
£200-£300m - product creation -operational support subsystems and service delivery, you can see the accounting codes in the Cartesian study completed for Ofcom.
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